Using oleaginous microbial lipid-based biorefinery from lignocellulosic biomass (LCB) to produce fermentative bioenergy (i.e., biodiesel) represents an innovative second-generation fuel production technology. These lipids are predominantly intracellular triglycerides that accumulate through the metabolism of sugars in fermentation following pretreatment and enzymatic hydrolysis of LCB. This review investigates the recent advances in the microbial lipid production from LCB, focusing on the factors influencing the lead microbial lipid producers, different pretreatment methods (i.e., physical, chemical, biological, and combined pretreatment), enzymatic hydrolysis approaches, novel bioprocessing strategies (i.e., microbes-specific and fermentation model specific), and engineering techniques of the oleaginous microbes (i.e., genetic and metabolic alterations). The study demonstrates that oleaginous yeasts can synthesize significantly higher quantities of lipids when incorporated into the system, known as separated hydrolysis and lipid production, following various combined pretreatment methods. Interestingly, CRISPR is found to be the most suitable way of engineering microbes genetically and metabolically for increased lipid synthesis. The study also explores economically viable strategies for fermentative lipid production, addressing associated challenges, and outlines future directions, including comprehensive techno-economic and life cycle assessments. This review offers invaluable insights into microbial lipid production from LCB, highlighting the potential for significant technological and environmental enhancements through ongoing research and development efforts.